[Industry Focus]：The weak situation of the polyethylene market and when can it be improved

After coming back from the May Day holiday, the polyethylene market performed more weakly, with more cautious purchases and general transactions. On the one hand, during the May Day holiday, international crude oil prices continued to fall, returned after the holiday, and plastic futures opened low, which to a certain extent dragged down the operational mentality of operators, and the focus of market quotations declined. On the other hand, due to holiday reasons, the upstream petrochemical inventory is significantly higher than before the festival. As of May 9, East China high pressure reported 8330-8550 yuan/ton, linear 8100-8230 yuan/ton, low pressure film 8100-8500 yuan/ton, low pressure brush 8000-9100 yuan/ton, low pressure brush reported 759 tons.

May 2023 Some domestic enterprises PE capacity status


source: Jinlianchuang finishing.

In terms of supply, domestic participation in maintenance devices increased in May. Yantai Wanhua full-density unit will be stopped for maintenance from May 1 and is planned to be repaired until early June. Lanzhou Petrochemical's old full-density unit stopped on May 9 due to failure, and the current driving time is yet to be determined. Ningxia Baofeng full-density unit stopped on May 4 and is planned to be maintained for one month. After temporary shutdown and cleaning on May 6, Dushanzi's new low-voltage unit restarted driving on May 9; zhejiang Petrochemical 450000 Tons/Year Full Density Second Line Plans to Maintain for 13 Days Starting from May 15; According to statistics from Jin Lianchuang, up to now, it is estimated that new domestic maintenance enterprises will lose about 143500 tons in May.

From the demand point of view, the end of the agricultural film in April, the overall level of construction fell. May and June are the traditional off-season for demand in China. The consumption of raw materials by product companies is gradually weakening, most of the purchases are made on a per-order basis, and overall demand is expected to be relatively weak.

From the perspective of crude oil, in May, the international crude oil market was affected by the Fed's monetary policy and the recovery of the banking crisis, and market concerns remained, leading to a sharp drop in oil prices. However, with the arrival of the peak oil consumption season, the crude oil market in the market outlook is expected to promote oil prices. As of May 9, international crude oil futures closed up, and WTI closed up 0.55 US dollars/barrel to 73.71 US dollars/barrel, an increase of 0.75. Brent closed up $0.43 a barrel, or 0.56 per cent, at $77.44. It is expected that oil prices will show a trend of first decline and then rise, and the cost of the market will be strongly supported.

In general, the overall supply and demand pattern did not change much in May, and the pressure on shipments did not decrease. Although there will be some support for the overhaul of domestic petrochemical industry, the general environment is still complex and grim, the follow-up of new orders by product enterprises is not good, and the mentality of terminal purchasing is cautious and continuous. It is expected that the weak situation of the polyethylene market will be difficult to change for the time being.

May 2023 Some domestic enterprises PE capacity status


source: Jinlianchuang finishing.

In terms of supply, domestic participation in maintenance devices increased in May. Yantai Wanhua full-density unit will be stopped for maintenance from May 1 and is planned to be repaired until early June. Lanzhou Petrochemical's old full-density unit stopped on May 9 due to failure, and the current driving time is yet to be determined. Ningxia Baofeng full-density unit stopped on May 4 and is planned to be maintained for one month. After temporary shutdown and cleaning on May 6, Dushanzi's new low-voltage unit restarted driving on May 9; zhejiang Petrochemical 450000 Tons/Year Full Density Second Line Plans to Maintain for 13 Days Starting from May 15; According to statistics from Jin Lianchuang, up to now, it is estimated that new domestic maintenance enterprises will lose about 143500 tons in May.

From the demand point of view, the end of the agricultural film in April, the overall level of construction fell. May and June are the traditional off-season for demand in China. The consumption of raw materials by product companies is gradually weakening, most of the purchases are made on a per-order basis, and overall demand is expected to be relatively weak.

From the perspective of crude oil, in May, the international crude oil market was affected by the Fed's monetary policy and the recovery of the banking crisis, and market concerns remained, leading to a sharp drop in oil prices. However, with the arrival of the peak oil consumption season, the crude oil market in the market outlook is expected to promote oil prices. As of May 9, international crude oil futures closed up, and WTI closed up 0.55 US dollars/barrel to 73.71 US dollars/barrel, an increase of 0.75. Brent closed up $0.43 a barrel, or 0.56 per cent, at $77.44. It is expected that oil prices will show a trend of first decline and then rise, and the cost of the market will be strongly supported.

In general, the overall supply and demand pattern did not change much in May, and the pressure on shipments did not decrease. Although there will be some support for the overhaul of domestic petrochemical industry, the general environment is still complex and grim, the follow-up of new orders by product enterprises is not good, and the mentality of terminal purchasing is cautious and continuous. It is expected that the weak situation of the polyethylene market will be difficult to change for the time being.